Volkswagen Moves Headquarters To Herndon

Volkswagen of America plans to announce Thursday that it will move its headquarters to Herndon, as part of a new corporate strategy for revamping its sagging auto business.

Stefan Jacoby, head of Volkswagen of America, said Northern Virginia's schools and skilled workforce were factors in choosing a headquarters. (By Jahi Chikwendiu -- The Washington Post)

The company said it would bring 400 jobs to the region and invest more than $100 million in setting up operations in a new office complex in Woodland Park near Washington Dulles International Airport. The move is part of a corporate restructuring that would eliminate 400 positions, leaving 600 full-time workers and contractors in Auburn Hills, outside of Detroit.

Volkswagen of America's new president and chief executive, Stefan Jacoby, said in an interview yesterday that Northern Virginia's high-quality schools, skilled workforce and proximity to the airport made it an attractive locale.

"For a young talent, 35 years old, to come here with his family..... is a very important factor," Jacoby said. "By reducing this organization by 30 percent, you need even more talents, more creative people, more motivated people."

Jacoby added that the company decided as of early 2006 that it wanted to move to the East Coast, where most of its customers are. "You want to work in an environment where you see your customers, where you see your cars on the road," he said. "You don't want to work where you basically see only American cars of the Big Three."

Gov. Timothy M. Kaine (D) authorized incentives worth $6 million to lure Volkswagen here, including a $1.5 million cash payment in the next year and $4.5 million over five years, starting in 2011. The company won't receive the grants until it meets benchmarks for bringing jobs and investing in the region. Fairfax County will spend at least $1.5 million to accelerate road and land projects to ease Volkswagen's move.

In an interview, Kaine raised the possibility that the move would make it more likely the company would choose to expand in the state if its fortunes improve. Its last U.S. plant, in Pennsylvania, closed in the late 1980s.

"We're also mindful of the fact that Volkswagen, as they succeed, they may want to put another presence in North America and if they have a strong anchor in Northern Virginia that could lead to further activity," Kaine said.

Volkswagen, which makes Volkswagen, Audi and Bentley cars, is part of the Volkswagen Group, based in Wolfsburg, Germany. The global company had $138 billion in sales in 2006 and is the world's fourth-largest producer of passenger cars.

Volkswagen has a strong history in the U.S., as customers flocked to its Beetle and Rabbit hatchbacks brands in the 1960s and 1970s. But in recent years, the automaker has struggled. Since 2000, its share of the overall market for passenger cars in the United States has fallen substantially and now makes up just under 2 percent of all sales.

"Lately we are not progressing with our growth strategy as we wish to do so in the American market," Jacoby said. "This is the single biggest market worldwide."

As it seeks to reverse the declines, Jacoby said, Volkswagen will focus on rolling out models certain categories -- small SUVs with an environmental slant, for instance, or passenger cars similar to the Toyota Corolla or Honda Accord. "We must find the right mix between being distinctive German, Volkswagen, European and hitting the hearts of American customers."

But he added that the company also needs to decentralize and slash bureaucracy -- one goal of the job cuts. About 150 people in Detroit are expected to move to Herndon, including much of the corporate leadership. The rest will include those serving in marketing, sales and other white collar jobs.

A consultant retained by Volkswagen contacted state economic officials in February to discuss moving here as it considered 14 cities. From there, the process moved rapidly, with little personal involvement by the governor. In early August, Virginia learned its bid to host Volkswagen was successful.

"I really thought with VW the reason we won was our numbers spoke for themselves: high median income, low unemployment, very connected to the global marketplace," Kaine said.

The investment by Volkswagen would be the largest in Fairfax since November 2004 when Booz Allen Hamilton announced it would create up to 4,600 more jobs in the county with a $133 million investment over five years.

The news is a setback for Michigan Gov. Jennifer Granholm (D), who has been struggling to keep her state's economy afloat as the nation's manufacturing base suffers. Jacoby flew to Detroit last night to meet with Granholm. She has vowed to keep auto jobs in Michigan.

Kaine, Jacoby and Gerald L. Gordon, president and chief executive of the Fairfax Economic Development Authority, are to attend a ceremony this morning at the new, 185,000-square-foot headquarters, where construction workers yesterday were tending to the grounds and caring for the newly-planted trees. Employees are to begin occupying the facility in April and the move should be completed by the end of 2008. --Zachary Goldfarb

Comments

If one reads between the lines one can certainly see that getting "paid" millions of dollars to move to another state when your business is in the slump to begin with is certainly worth going. As for not seeing their cars in Michigan I have seen plenty and since VW does not give Michigan any manufacturing jobs why would there be alot of their cars here. In fact, I'd like to see a list from ALL the car companies of just how much TRUE manufacturing is really done here.

Stefan Jacoby stated "By reducing this organization by 30 percent, you need even more talents, more creative people, more motivated people." Moving to another state certainly isn't going to guarantee a business that. I say let them go and move to a 185,000 square foot building that they can afford with the money they get from the state, quit purchasing their vehicles and when they close in Fairfax like they did in Pennsylvania in the 1980's then Fairfax can have a 185,000 square foot building to look at.

I personally think it is time to give a Michigan business the Michigan business. When Comerica chose to move their headquarters can I blame them? No, I can't but I also don't have to have my business there. I'll give it to a Michigan Bank. Many states are going through a very difficult time because we as Americans always try to help those in need. Maybe it's time we look in our own backyards and help those who are really making an effort to help themselves. Their is a lot of talent in Michigan and we need to support that talent and energy. If Michiganders supported Michigan people by purchasing Michigan products you would see a major difference in our states economy. Think of that today when you are going to purchase something. All of us can make the difference!

Karen Arondoski

Posted by: Karen Arondoski | September 6, 2007 9:45 AM

Kudos to Mr. Jacoby for saying, loud and clear, what our ostrich-like Michigan mind set doesn't want to hear (but our few remaining young professionals wish politicians would acknowledge and act upon): people of our demographic will turn down a job if they'd have to live in an area that is uninteresting or unattractive to them. Michiganders need to cease stubbornly clinging to the fearful love of complancency and mediocrity that's driving out young talents. Young professionals simply aren't buying what you're trying to sell as dedication to a family way of life. Pull your heads out of the sand and lets save the state!

Posted by: Chiara Mattieson | September 6, 2007 10:00 AM

I agree with Chiara, the House and Senate in Michigan need to wake up and realize that they have not prepared Michigan for the future - and yes, as our representatives, that IS one of their jobs!! They have spent way too much time and energy on the past with "their heads in the sand". Not only are the young professionals leaving for better jobs and a brighter future, but so is everyone else. Michigan is a state that was dominated by the car industry and people have not come to the realization that we need to diversify and encourage businesses to come to Michigan that will bring jobs. Instead, we see legislation to move the date of the primary up in Michigan, only to have the candidates boycott us for moving up the date. I am still wondering who is doing the thinking in this state. Or, maybe I know - no one is!!